The President will announce the 2011 federal budget of $3.8 trillion later today. In a rather dicey tightrope walk, the President has to maneuver the ship of state between a series of economic and political iceburgs towards a high-tech future of green energy, robotics and biotechnology. At the same time, it is imperative to reduce the deficit as the long term budgetary outlook contains a number of obstacles that threaten our financial security as well. According to OMB director, Peter Orszag, the goal of the budget is to set the country on a path of job growth and prosperity through gradual deficit reduction while investing in “education, clean energy and innovation.”
Specifically addressing FDR’s mistake in reducing spending in 1937, Orszag indicated the Administration will not make drastic cuts that will threaten the fragile recovery. The path to deficit reduction is based on reversing the fiscal policies of the last 8 years including allowing the Bush tax cuts for those earning over $250,000 to expire, ending the fossil fuel subsidies, ending the Iraq & Afghanistan wars, implementing the Fiscal Commision, and instituting the 3 year freeze. In addition, Orszag said strict adherence to PayGo will prevent irresponsible spending as it did in the 90s. This is also the thinking behind the freeze in that departments will have the ability to raise spending provided they find reductions to pay for it. These tactics are expected to reduce the deficit to 3.9% of GDP by 2015, just above the accepted target of 3% of GDP. Even so, in order to set the country on solid ground for the long term, Orszag acknowledged the need to reform health care in order to reduce the costs of Medicaid and Medicare. Health care has the potential of consuming over 10% of GDP by 2050, which is not sustainable.
The budget isn’t all slice and dice though. Some of the more exciting things to be included in this budget are the increased investment in education and innovation. For NASA, while the moon mission will be cancelled, there will be increased investment in robotics needed for a manned flight to Mars as well as a transition to commercial transport in preparation for the day when space travel becomes a reality.The International Space Station and Shuttle will also be kept alive, although in a reduced capacity. Education is also looking at massive changes with the goal of 60% of our students becoming college graduates by 2020.
The President will also keep his commitment to the troops and military families, as Mrs. Obama announced last week. In a 20-minute speech to the Joint Armed Forces Officers’ Wives’ Luncheon at Bolling Air Force Base, she announced a record $8.8 billion request for military family support programs, including $1.3 billion for military child care and youth programs, 439 million to build 10 new schools, $14 million in new funding for Coast Guard housing, and $84 million for a new spousal career development initiative.There are also increases for medical needs including $250 million for mental health research and $1.9 billion for counseling services.
And there is also money budgeted to purchase and retrofit the Thompson Prison in Illinois for the placement of Guantanamo prisoners, which will be good news to those seeking its permanent closure.
All in all, this looks to be an ambitious budget that is providing sufficient funds to generate ingenuity and innovation, the building blocks of the American economy. Cuts are always harder and will undoubtedly be challenged and changed as the debate moves to Congress.
Links:
http://obama-mamas.com/blog/?p=1162
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